1287151--3/2/2006--XERIUM_TECHNOLOGIES

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{debt, indebtedness, cash}

{product, market, service}

{operation, international, foreign}

{stock, price, share}

{condition, economic, financial}

{cost, contract, operation}

{acquisition, growth, future}

{cost, operation, labor}

{cost, regulation, environmental}

{product, liability, claim}

{property, intellectual, protect}

{customer, product, revenue}

Risks Relating to our Business and the Industry A sustained downturn in the paper industry could adversely affect our revenues and profitability. We may be required to reorganize our operations in response to changing conditions in the paper industry, and such actions may require significant expenditures and the results on operations may not ultimately be successful. Fluctuations in currency exchange rates could adversely affect our revenues and profitability. Increased price competition in our industry could adversely affect our gross margins and net sales. Our industry is competitive and our future success will depend on our ability to effectively develop and market competitive products. Because we have substantial operations outside the United States, we are subject to the economic and political conditions of foreign nations. We must continue to innovate and improve our products to maintain our competitive advantage. The loss of our major customers could have a material adverse effect on our sales and profitability. We may fail to adequately protect our proprietary technology, which would allow competitors or others to take advantage of our research and development efforts. We may be liable for product defects or other claims relating to our products. We could incur substantial costs as a result of violations of or liabilities under laws protecting the environment and human health. Adverse labor relations could harm our operations and reduce our profitability. If we acquire other businesses, we may not be able to successfully integrate them into our operations and/or the expected benefits of such acquisitions may not be realized. Risks Relating to our Capital Structure You may not receive any dividends. Our credit facility prohibits us from paying dividends in the future if we do not improve our financial performance. We are subject to restrictive debt covenants that limit our business flexibility by imposing operating and financial restrictions on our operations. Our substantial indebtedness could restrict our ability to pay dividends with respect to shares of our common stock and impact our financing options and liquidity position. We may be able to incur substantially more debt, which would increase the risks described above associated with our substantial leverage. We will require a significant amount of cash, which may not be available to us, to service our debt and to fund our liquidity needs. Required payments with respect to our indebtedness and payments pursuant to our dividend policy will reduce the amount of funds available for other corporate purposes, which could harm our competitiveness and/or limit opportunities to grow our business. The market price of our common stock has been volatile since our initial public offering and may continue to be volatile. As of December 31, 2005, entities affiliated with Apax Europe IV GP Co. Ltd. ( Apax ) own approximately 52% of our common stock and will therefore have significant influence over our business and significant transactions.

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1287151--3/2/2006--XERIUM_TECHNOLOGIES_INC